What are some use cases of decentralized finance?
As previously stated, decentralized finance is an umbrella term with numerous applications in various fields. They are
1. Decentralized Exchange (DEX):
Decentralized transactions, which operate without the need for a central authority, allow users to conduct peer-to-peer transactions while maintaining control over their funds. DEXs eliminate the risk of market manipulation, intrusion, and data theft because the exchange does not own the crypto assets.
2. Borrowing / Lending:
The most popular platform in the DeFi ecosystem is peer-to-peer lending and borrowing. Users can obtain loans through decentralized finance without the need for a bank account or an application review.
Some dApps eliminate the need for the borrower to find a lender by acting as the lender itself, with interest rates determined by supply and demand. As a result, this platform streamlines and streamlines the loan and borrowing process.
3. Blockchain-based Game:
Decentralized finance's flexibility has given product developers more options for incorporating its protocols into platforms across multiple industries. Due to their integrated economies and creative incentive model, Ethereum-based games have emerged as a prominent application for decentralized finance.
For instance, Axie Infinity, PoolTogether, and so on. PoolTogether is a no-loss DeFi audited game that allows players to deposit DAI stablecoins to purchase lottery tickets.
Any cryptocurrency that is linked to other cryptocurrencies, fiat currency, or precious metals is referred to as a stablecoin. Stablecoins were created to reduce the volatility of cryptocurrency values and make blockchains a viable payment option.
These stablecoins are now used in the DeFi platform for lending/borrowing, payments, and institutional applications such as Central Bank Digital Currency (CBDC).
Trading takes place on a network of exchanges, liquidity pools, and markets in the DeFi industry, which is growing and becoming more interconnected. Futures trading, margin trading, token swapping, and other trading activities are examples of trading activities. Because of decentralized exchanges, cryptocurrency traders can benefit from lower transaction fees, faster processing, and single custody of their assets.
Cryptocurrency users will be able to stake their coins and profit from decentralized blockchain-based products. Furthermore, the staking process allows users to contribute to the blockchain network's Proof of Stake (PoS).
The only prerequisite for the PoS mechanism is that validators stake some cryptocurrency on the blockchain. As a result, users become validators shortly after the locking process and begin earning rewards for validating blocks on the network.
DeFi protocols allow users to exchange goods and services all over the world, from freelance coding jobs to digital collectibles to real-world real estate, sports items and apparel, and more.
These are the various applications of decentralized finance in a variety of products. Apart from the aforementioned industries, DeFi can be found in any decentralized business, including infrastructure tools, prediction markets, insurance, and identity management.
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